Judge’s Order Complicates Education Department’s Borrower-Defense Program
Katherine Knott
November 7, 2023
For-profit DeVry University won’t have to pay nearly $24 million to the U.S.—for now—thanks to a court ruling that could hamper the department’s plans to make colleges that mislead their students pay up.
Earlier this fall, the Education Department announced that it would forgive $109 million in loans held by students who were misled by the University of Phoenix and Ashford University. Department officials said they would try to claw back some of that money from the for-profit institutions, though they haven’t moved forward yet.
However, an Oct. 17 decision—in a closely watched test case of how the department can use its authority to recoup money from institutions—could put those plans on hold.
Federal borrower defense to repayment rules allow those who believe they were defrauded or misled by a college to file a claim seeking relief and potentially have their loans discharged. If the department agrees with the borrower and discharges those loans, federal regulations allow the agency to recoup funds from the institution the student attended.
